The French wine sector: global competitor, supplier and customer

Market Bulletin | Issue 53

04 Apr 2017
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This week we take a look at France as a global wine competitor.

France is one of the three largest wine producers in the world – changing places with Italy and Spain depending on each vintage’s crush. In 2016, France produced 4.2 billion litres of wine, coming in second after Italy (4.9 billion litres) and ahead of Spain (3.8 billion litres). France produced more than three times Australia’s production (1.3 billion litres).

France is a significant net exporter of wine, despite the domestic market being the second largest in the world at 2.4 billion litres and France having the second highest per capita consumption in the world at 37.4 l/capita (Euromonitor, 2015 data).

However, wine consumption in France has declined by an average of 1 per cent per year for the past 5 years and is projected to decline by a further 2 per cent in volume over the next 5 years (Wine Intelligence, 2016). This will likely push more of the country’s wine production onto the export market.

France is the number one wine exporting country by value

In 2016, France exported 1.4 billion litres of wine around the world at a total value of just over US$9 billion (FOB) and US$6.43 per litre. This was 50 per cent more than its nearest rival Italy (US$6 billion). However, the value of French wine exports declined by 0.5 per cent in that year and volume decreased by 1 per cent. By comparison, Italy grew by 4 per cent in value and 3 per cent in volume, and Australia’s exports grew by 5 per cent in value and 3 per cent in volume over the same time period (Global Trade Atlas data 2016 [1]).

Looking at the key markets for Australia and France in terms of improvements in export value over the past 12 months, Australia performed better in China, the UK and Germany, while France performed better in the North American markets.

 

 

France

Australia

Market

Market rank by total value

Change in value 2015–16 (%)

Market rank by total value

Change in value 2015–16 (%)

Overall

 

        -0.5

 

            5

US

1

            5

2

           -3

UK

2

         -10

3

           -8

Germany

3

           -4

9

            6

China

4

          10

1

          43

Canada

9

            2

4

            0

Source: Global Trade Atlas

 

France dominates global retail wine shelves and menus

A 2016 audit by MiBD Market found that French wine accounted for 43 per cent of all 750ml bottles of wine available in 2500 on- and off-trade outlets in 8 major world wine markets. The same survey placed Australia third with 9 per cent. However, Australia’s year-on-year growth was the highest (at 2.9 per cent) of any of the 10 largest exporting countries including France (1.2 per cent growth) and Italy (-1.9 per cent). This was largely driven by Asian markets, where Australia is second overall and its growth rate in the past 12 months was more than double its nearest rival (see table).

 

Table 1: share of total market for selected cities in China, Japan and Hong Kong by source country and change in share from 2015 to 2016

Source: MIBD Market

 

How does French wine fare in Australia?

Closer to home, France is the second largest source of imported wine in Australia, after New Zealand, accounting for 14 million litres (16 per cent of total imported wine) and valued at US$268 million in 2016. According to IRI figures, the Champagne region accounts for around 60 per cent of French imported wine on the off-trade, with Loire Valley second at 13 per cent. Bordeaux makes up only 2 per cent.

Australia exported 5 million litres of wine to France in 2016, valued at US$6 million. While this is relatively small, exports grew by 4 per cent in value and 19 per cent in volume in the past 12 months. In the same timeframe, imports of French wine to Australia were static in value and fell by 9 per cent in volume.

 

[1] Wine Australia’s published export statistics are slightly different due to variations in method and timing. Global Trade Atlas figures are used here for direct comparison purposes.